"If you just let the large financial firms fail, as we learned last fall, panic ensues," said the president and CEO of the Federal Reserve Bank of St. Louis. "These firms are not necessarily banks. One of the big issues in this financial crisis has been the rise of the shadow banking system -- largely unregulated, much less regulated than your ordinary, corner bank."

The St. Cloud State graduate argued that financial reform should include regulation of systemic risk, a mechanism for shutting down failing financial firms and systems for global cooperation.

"Our reform efforts have to focus on getting this completely intolerable situation under control," Bullard said.

Bullard, who serves on the Federal Reserve's powerful Open Market Committee, suggested that the Federal Reserve is best suited to play a lead role in managing new financial regulatory systems.

"The Fed is the nation's lender of last resort. We've seen that in spades during this crisis," Bullard said. "If you're going to be lending in a crisis, I think you need to be involved in the regulatory structure in the non-crisis period so that you know what's going on in the financial systems, so that if the crisis comes, you know who to make the loan to, you know who's who."

The St. Louis bank is one of 12 regional banks in the Federal Reserve System, which regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.

Most importantly, the Fed formulates U.S. monetary policy.

"Because the natural information you get from the financial sector informs monetary policy decisionmaking, the Fed should have a big role in the regulatory structure," said Bullard.

Bullard's 35-minute presentation included an appraisal of the economy:

This is the worst recession since the 1981-82, although unemployment may not reach that period's peak of 10.8 percent.

Personal consumption has stabilized after plummeting in the wake of high oil prices and the September 2008 failure of Lehman Brothers and federal rescue of AIG.

The housing market is ceasing to decline.

The unemployment situation is severe, having roughly doubled from a pre-crisis rate of about 5 percent.

The pace of job loss is easing.

Turmoil in the financial markets has lessened.

Inflation is well-contained, but because the Fed has more than doubled the money supply, there is a risk of future inflation.

"I think it's important to note inflation uncertainty is quite a bit higher than it has been at any time in the last 25 years," he said.

A Forest Lake, Minn. native, Bullard earned bachelor's degrees in economics and quantitative methods and information systems from St. Cloud State in 1984. His wife, Jane Callahan is a 1983 graduate with a bachelor's degree in political science.